Kaiser Permanente CEO is stepping down in December 2013

Employees at a Kaiser Permanente hospital in Los Angeles look after a patient.… (Al Seib / Los Angeles Times )

The longtime chairman and chief executive of Kaiser Permanente, George Halvorson, said he plans to retire in December 2013 and the nonprofit health system is searching for a new leader.

Halvorson, 65, helped build the Oakland company into the nation's largest nonprofit health plan and hospital system with more than 9 million customers and nearly $50 billion in annual revenue.

After taking the helm in 2002, Halvorson spearheaded the decision to invest in Kaiser's industry-leading electronic medical record system.

"What we have done is a totally electronic, paper-free environment where data is flowing freely from doctor to doctor and to the patient. We have gotten there and it works," Halvorson said in an interview.

Kaiser has also continued to receive high marks from outside groups on patient safety, healthcare quality and member satisfaction.

"I'm really happy with what we've achieved and it's time to hand that over to someone else," Halvorson said.

Halvorson said he announced his departure more than a year in advance to give Kaiser's board time to deliberate on a successor. He said he will advise the board, but he won't take part in the actual selection.

Halvorson's announcement marks another executive shakeup in the healthcare industry. In May, Blue Shield of California's chief executive, Bruce Bodaken, said he was retiring at year's end and Paul Markovich was being promoted to the top job.

In August, industry giant WellPoint Inc. began searching for a new CEO after Angela Braly left amid growing investor criticism about the company's performance. WellPoint runs Anthem Blue Cross in California.

Halvorson was a key player in many of the debates over the federal Affordable Care Act and other healthcare issues. Many federal officials cited Kaiser's integrated approach as a model for how doctors and hospitals can better coordinate patient care and where compensation is tied to the quality of care given rather than the quantity of medical tests and procedures.

However, some employers have complained about Kaiser's hefty rate hikes year after year. Halvorson said Kaiser typically offers more comprehensive benefits than competitors at rates that are often 10% less.

In 2010, the latest information available, Halvorson earned $7.7 million in total compensation, according to Kaiser's federal tax filing.